OBSESSED BY A THEORY OF CONSPIRACY

By S and ra SugawaraBy S and ra SugawaraOctober 1, 1990

Sometimes in the still of the night, in the quiet of his living room or in the isolation of his car, Bill Hamilton will remember a forgotten conversation with a Justice Department official or a long ago phone call from a competitor or a colleague. And his mind will take that information, mull it over, turning it this way and that, as he tries to fit it into the puzzle that has become his life's obsession.

The puzzle: Why did a seemingly simple contract dispute over a software product evolve into a blood feud with the Justice Department, plunging his District computer software company, Inslaw Inc., into bankruptcy court for almost four years? And was somebody powerful trying to destroy his company?

"He's consumed by that one thought constantly," said his 19-year-old daughter Molly. "I'll see him in the living room and I can tell by the expression on his face that he's thinking about it. ... He's always working on it.".

The 49-year-old former National Security Agency analyst has spent much of his waking hours over the past several years trying to prove a conspiracy theory about his company's plight. Hamilton is convinced that Inslaw's primary product, a software system that enables the Justice Department to keep track of large numbers of legal cases, was the target of politically powerful people who sought to take it away from Inslaw and sell it themselves to the government.

Among his list of suspects are D. Lowell Jensen, a former top ranking Justice Department official, and Earl Brian, a member of Ronald Reagan's cabinet when he was governor of California and a friend of former attorney general Edwin Meese. All those on his list have denied any wrongdoing, in court documents and in interviews.

"To the best of my knowledge, I never met him and I have no knowledge of his operations," said Brian, who is chairman of United Press International and Infotechnology Inc. of New York. Brian said he believes that Hamilton is trying to recover money he has lost over the years "and any story he can come up with that is the least bitplausible hopefully will get him his day in court, from his perspective."

In the course of his battle, Hamilton has alienated some people, who claim that he is hostile to those who do not buy his theory. While acknowledging that Hamilton has a phenomenal memory for facts, they argue that he takes those facts and alters them to fit into his own agenda.

However, Hamilton also has marshaled an impressive list of supporters, including former attorney general Elliott Richardson and Charles R. Work, former president of the D.C. Bar, a lawyer's group. He also has gotten a number of sympathetic stories and editorials from a wide range of reporters and columnists who he regularly bombards with documents, memorandum and press releases.

Confounding opponents, skeptics and some considerable odds, Hamilton has won two crucial courtroom victories.

George F. Bason Jr., the bankruptcy judge who oversaw the Inslaw case, issued in 1987 a scathing condemnation of the Justice Department's behavior, declaring that the agency used "trickery, fraud and deceit" to steal Inslaw's computer software. Senior U.S. District Judge William B. Bryant of Washington backed up Bason's decision, awarding Hamilton $6.1 million in compensatory damages.

The Justice Department has appealed the case and will not discuss its details. A spokesman said that the department has requested that the matter be considered for mediation by the appeals court, in an attempt to settle the long-running dispute.

The decisions, however, did not establish the second half of Hamilton's theory, that Brian, Jensen and others were behind the alleged campaign against Inslaw. So last December Hamilton filed suit in U.S. District Court seeking to force Attorney General Richard Thornburgh and the Justice Department to conduct a "fair and thorough" investigation into his larger conspiracy charges. The latest suit will not bring him any money if he wins, just answers to his many questions.

A Justice Department spokesman said that the department already has looked into the accusations and found nothing. Hamilton argues that those investigations were inadequate. The Justice Department spokesman also noted that a Senate investigation failed to find evidence of a conspiracy against Inslaw within the Justice Department.

However, the Senate report also complained that the Justice Department was uncooperative in the investigation. Unhappy that the Senate probe was not more aggressive, Hamilton has convinced the House Judiciary Committee to launch one of its own. But the results of that investigation are expected to be several months away.

"A lot of people think Bill Hamilton is paranoid. I don't think so," said Leigh Ratiner, who represented Inslaw during the mid-1980s. "Bill Hamilton does not feel unreasonably persecuted. ... Given the facts, it's entirely reasonable to feel the way he does."

Ratiner explained Hamilton this way: "Bill is besieged by the need to find justice and vindicate his life, his management capabilities and look good in the eyes of his family and employees."

But Hamilton said the root of his obsession is justice, not personal vindication. His company will not get a fair break from the government until his enemies are exposed, he said.

"The thing that's important to understand," said Hamilton, "is not only are we determined to get a fair and thorough and independent investigation of this matter, but we have no choice."

When Hamilton says this, he does not pound his fist or shout. His indictment proceeds as a matter-of-fact litany of names, dates, places and conversations, as he peers intently at the listener from behind his wire-rimmed glasses, as if to ask: "Do you get it?"

Or sometimes, after he presents a laundry list of wrongs he believes were committed against Inslaw, a sad but youthful grin will break out from behind his graying beard and he'll quietly shake his head in disbelief.

Software Called Promis Hamilton's pride and joy is a pioneering computer software called Promis (Prosecutors Management Information System), which was designed to help prosecutors and lawyers keep track of their cases.

Initially, Promis was developed with federal funds from the now-defunct Law Enforcement Assistant Administration (LEAA), when Inslaw was the nonprofit Institute for Law and Social Research. But in the late 1970s, when it became obvious that LEAA would be phased out, Hamilton decided to turn Inslaw into a for-profit company and sell the software improvements to the government.

Hamilton, a Notre Dame University graduate and St. Louis native, said he was just a naive Midwesterner back in those days, but even then, he appreciated the value of connections. He hired Roderick Hills, former chairman of the Securities and Exchange Commission, as one of his lawyers. A fortuitous choice, Hills introduced Hamilton to an attorney who would come to play a key role in Inslaw's fate: Elliot L. Richardson.

Richardson originally was brought in to serve on a board of directors, but as Inslaw became more and more entangled in its feud with the Justice Department, it was Richardson who would serve as troubleshooter. Richardson's frequent calls, sometimes from airports or late at night, often boosted Hamilton's morale. And it was Richardson who gave Inslaw's case legitimacy in Congress and elsewhere, according to many.

"The more I got into this case, the angrier I got," at what was happening to Inslaw, Richardson said. "It goes to the heart of the integrity of the Department of Justice itself." He added, "In any situation where there is this much evidence ... to just brush aside this evidence is destructive of public confidence."

In retrospect, Hamilton said there were warning signs almost as soon as Inslaw won the three-year, $10 million contract from the Justice Department in March 1982 to install Promis software in the offices of U.S. attorneys across the country. Almost immediately, attorneys for Inslaw and the Justice Department were fighting over which improvements the government had financed and thus owned, and which enhancements belonged to Inslaw.

Hamilton said the dispute became unusually contentious.

Back then, Hamilton thought his problems could be directly traced to the project manager overseeing the Promis contract, C. Madison Brewer III. From 1974 to 1976, Brewer worked for Inslaw. Hamilton said he fired Brewer; the government said he resigned. Brewer declined to comment on the Inslaw case.

Hamilton said he tried to avoid Brewer, letting other company officials negotiate with him, believing that might make things go more smoothly. But by February 1985, the Justice Department had withheld $1.2 million in payments to Inslaw, forcing the company to file a Chapter 11 bankruptcy petition, staving off creditors while it attempted to regain control of its finances.

The entire family quickly became drawn into the survival fight.

"Bill and I are down here {at the office} from morning until late at night, and our kids are calling, saying that the sheriff was at the door looking to serve subpoenas to us," said a still angry Nancy Hamilton, Bill's wife, who joined the firm in late 1984 as vice president of administration. "It was very frightening for the kids."

After Richardson tried unsuccessfully for nearly a year to settle the dispute, the Hamiltons decided in 1986 to take the offensive, suing the Justice Department to recover the money they said they had lost.

Competing Program

Hamilton was forever digging through his old appointment books, memos and scribbled notes. One night, he said, he was jolted awake by the recollection of a forgotten conversation: A Justice Department official had confidentially told one of his attorneys that Brewer was not his only problem. At the time, Hamilton had assumed this was a reference to D. Lowell Jensen, a senior Justice Department official.

Before coming to the Justice Department, Jensen had been in the Alameda County, Calif., prosecutor's office, where he had supervised the development of a competing case-tracking software called Dalite. Jensen was disappointed when the Los Angeles district attorney's office and LEAA had opted for Promis, according to Hamilton. He now believes Jensen was part of the Justice Department group that allegedly wanted to get Inslaw.

Jensen, who is now a federal judge in San Francisco, declined to comment, through an assistant.

Seeing Shadows Everywhere

Before long, the Hamiltons acknowledge, they were seeing shadows everywhere.

"By this time, we were really distrusting," said Nancy Hamilton. The Hamiltons even became suspicious of the motives of the law firm they had hired, Dickstein Shapiro & Morin.

Hamilton began hearing from Ratiner, who was the Dickstein Shapiro attorney handling the case, that others in the firm felt Inslaw should stick to the narrow facts of the contract dispute and not go after Jensen.

The Hamiltons concluded that the Justice Department was pressuring the law firm to drop Jensen from the suit and that Dickstein Shapiro was selling out Inslaw to protect its ties with its more politically important clients. The law firm categorically denied Hamilton's assertions during a later court battle with Inslaw over legal fees and a Baltimore bankruptcy judge later ruled in favor of Dickstein Shapiro, clearing it of all malpractice accusations.

But it was these fears that caused the Hamiltons to take a most unusual step. They decided to file the suit themselves, before Dickstein Shapiro could make any changes in the legal papers.

On June 7, 1986, the Hamiltons told Ratiner of their plans. He urged them to wait. "Normally it's easy for a lawyer to intimidate a client," Ratiner said. "But not Bill."

Joined by their six children, ages 3 to 22, the Hamiltons piled into their 1963 Volkswagen and their Oldsmobile station wagon and headed down to the U.S. District Court for the District of Columbia. To photograph the event, they brought along a girlfriend of their oldest daughter Patty.

"It was a big day in our lives because for the first time, we understood what was happening to us and we had an opportunity to protest, it was quite a milestone," said Nancy Hamilton. "It makes me emotional to talk about it even now."

In October, Ratiner called to say he was being fired from Dickstein Shapiro. The Hamiltons said they were convinced it was because of the Inslaw case. Ratiner, who now teaches international negotiations at American University and has a small company specializing in data entry services, declined to comment on the question.

Work, a longtime friend of Hamilton's, was able to work out a temporary truce but Dickstein Shapiro and Hamilton parted for good when the firm concluded that Hamilton had overstated the improvements to the software produced by Inslaw. "

Thus in 1987, Inslaw was preparing to go to trial against the government without a lawyer and in the middle of a bankruptcy reorganization.

A determined Hamilton convinced two lawyer friends in California to fly to Washington and help out with the deposition. For a week, the two lawyers slept in one of the children's rooms in the Hamilton's house and took depositions from morning until night.

When Hamilton's lawyer friends returned to California, he prevailed on Work to take his case.

Work and Hamilton had worked closely together in the early 1970s when Work was an assistant U.S. Attorney, supervising the installation of the LEAA-funded versions of the Promis software. Work also served as deputy administrator of LEAA under Richardson.

Favorable Ruling The ruling by bankruptcy judge Bason in September 1987 elated the Hamiltons.

Bason concluded that Brewer was biased against Inslaw and that the Justice Department's "failure to begin to investigate Inslaw's complaints was outrageous and indefensible. It constituted an institutional decision by the Department of Justice, consciously made at the highest level, simply to ignore serious questions of ethical impropriety ... "

Although the ruling was critical of Jensen, too, it did not spell out the conspiracy that Hamilton said he believes existed.

The celebration over the ruling had barely ended before Hamilton was back on the case, his suspicions inflamed anew. A journalist who knew about Hamilton's fight mentioned to him that the Justice Department had awarded a computer contract to a subsidiary of Hadron Inc., a Fairfax government contracting company.

The reporter explained that Brian owned a major share of Hadron. The reporter also reminded him that the Meeses' had invested in one of Brian's companies. Suddenly, the name Hadron rang a bell. He hung up the telephone, turned to his wife and said: " 'Hadron! I think that company called me to try to buy me in '83.' I went to my desk calender, one of the old ones, started going through those months until I found it: April 20, 1983, with the name Dominic Laiti and his telephone number."

Hamilton remembers the phone call this way: Laiti, then chairman of Hadron, told Hamilton he was interested in the Promis software and wanted to buy Inslaw to get it. Hamilton replied that the company wasn't for sale.

Hamilton quotes Laiti as replying: "We have political supporters at the highest level of the Reagan administration," and "We have ways of making you sell."

Laiti, who is now president of Globalink Language Service, said he never tried to buy Inslaw, nor does he remember ever talking to Hamilton.

Assistance From IBM Bason's ruling pulled Inslaw out of the ditch. On Dec. 31, 1988, the company emerged from bankruptcy with the assistance of International Business Machines Corp. The computer giant had long been interested in jointly marketing Promis software and loaned the company $2.5 million.

Almost a year later, the Hamiltons got more good news.

On Nov. 22, 1989, the Court of Appeals confirmed the bankruptcy court decision against the Justice Department.

The appeals court said "Inslaw performed its contract in a hostile environment that extended from the higher echelons of the Justice Department to the officials who had the day-to-day responsibility for supervising its work."

The court concluded that the government "acted willfully and fraudulently to obtain property that it was not entitled to under the contract."

Tracking Down Leads Inslaw is still at the 15th Street offices where it has been since 1974. The office is filled with sleek furniture, dressed-for-success employees and other trappings of a successful computer software company. It has developed new sales with state and local governments and law firms.

But Hamilton still spends a good part of each week trying to track down leads on the case. He rarely watches television and hates sports. Occasionally he rents videos. One of his favorite movies in recent times was "All the President's Men," about the Watergate conspiracy.

Hamilton also has become a repository of phone calls from people who feel wronged by the government. He said he listens to them all, no matter how far out, because he understands their frustrations and is more that willing to believe the abuses they describe.

Today, suspicion of the government runs in his marrow. Was he like this before? No, Hamilton said.

"It might be that nobody will know who the real Bill Hamilton is again," said Ratiner. "For instance, I can imagine that before this case, he might have been concerned about real people. But now, if you're not talking to him about Inslaw, you're kind of invisible."

Hamilton said he's sad about the times he could not be there for friends, for family and about the part of his life that has been robbed by this case.

"I'm angry," Hamilton finally said quietly, after first skirting around the issue of his feelings. "I have enough anger to last me for a generation."